First-quarter pricing for organic grains were mixed.
According to Mercaris, the organic and non-GMO market intelligence firm and trading platform, average prices for hard red winter wheat that is suitable for organic food increased in the most recent two-month period while volume also slightly increased. Prices for organic soybeans and corn decreased from the previous time frame.
pricing for food-grade organic hard red winter wheat increased by $2.70 over the previous two months and by $1.77 over December and January, averaging $13.57 per bushel in February and March. Mercaris did not provide pricing from a year ago.
“The first quarter concluded positively for organic hard red winter wheat,” stated Mercaris senior economist Ryan Koory. “Trade volumes increased in keeping with seasonal trends and are currently on pace to surpass levels from the second quarter of 2017 in April.
“We already discussed the worries that have been voiced regarding the winter wheat harvest of 2017–18 and its quality. These worries have been validated on a national agricultural level by recent crop development reports from the U.S.D.A.
However, Mr. Koory pointed out that organic winter wheat seems to be shielded from the slump because the majority of the lower-rated crop is located in the southern Plains, which has a comparatively low percentage of acres dedicated to organic winter wheat. Early in April, crop condition ratings were reported for all three of the states that produce the most organic winter wheat—Wyoming, Montana, and Colorado—to be on par with or better than the five-year norm.
Mercaris published prices of $20.40 per bu for organic food-grade hard red spring wheat; prices from the previous two reporting periods were not quoted, but they increased by $2.50 from $17.90 per bu a year earlier.According to Mr. Koory, “market activity for organic hard red spring wheat gained a bit of momentum at the end of the first quarter.”
“Trades of organic durum wheat remained scarce during the first quarter of 2018,” stated Mr. Koory. “Trading activity did increase in February compared to the previous month, but it slowed down again in March and hasn’t increased in April.”
According to Mercaris, the average price of organic maize in February and March was $9.75 per bu, which was $1.27 more than a year earlier but down 12c from the previous two-month periods combined.”Trade volumes of organic corn increased slightly in March following a few months of very low activity,” Mr. Koory stated. The price of food grade organic maize stayed slightly below the $10 per bushel threshold at the end of the first trading day, indicating that the increase in trades has not yet resulted in price support.
Before planting, operators were looking for cash flow, therefore Mercaris had previously stated that it expected the food grade corn trade to ramp up in the spring. April has been significantly more robust thus far, even though the amount of maize exchanged in March was only marginally higher than the previous month. We have seen the highest volume transacted through the first two weeks of the month since the current marketing year started in September 2017.
“As more farmers try to obtain funds before planting, it’s unclear if increased trade would result in lower prices or if corn will rise above the $10/bu area, piqueing the attention of less financially challenged farmers who have some excess grain to sell. Mercaris believes that given the present trajectory of feed grade corn prices, which peaked in March at $10.25 per bu, prices will probably rise over the spring, which will probably serve as a trigger for greater volume to enter the market.
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For the February–March period, organic food-grade soybean prices were quoted at $20.20 per bu, down 26c from January–February, down $3.26 from December–January, and down 93c from $21.13 per bu a year earlier. Because prices are provided as a rolling average and are occasionally “backfilled” by dealers, price movements from previous periods can differ from previously published values, according to Mr. Koory. In previous month’s report, soybeans were quoted at $23.04 for the January-February period.
“Even as April approaches, organic soybean prices don’t seem to be able to get over their winter slump,” Mr. Koory stated. Organic food-grade soybean prices have struggled to stay above last year’s level, with the exception of a few trades that were reported to be above $25 per pound.
With the overall state of the organic industry in the United States, this presents a bit of a conundrum. Since the beginning of the 2017–18 marketing year, wheat and corn prices have increased steadily, helped by a number of factors that have tightened the U.S. market. The U.S. soybean market seems particularly tight this year, according to Mercaris supply-and-use projections, and buyer anecdotes seem to support this assertion. But prices don’t seem to be reflecting the tight supply of soybeans in the United States.
“Mercaris is still hopeful that trade will pick up steam in the upcoming quarter, which could provide additional price support. However, it seems that soybean prices are currently at a buyer’s market level.
According to Mr. Koory, farmers who plant organic crops tend to plant them earlier in order to prevent cross-pollination with non-organic crops, therefore planting delayed due to extended inclement weather may provide a higher risk to organic grain producers than to conventional growers. Furthermore, because many organic farmers follow four-year crop rotations to ensure their soil contains enough nutrients and to control weeds, they are less flexible than conventional farmers when it comes to switching from corn to crops with shorter growing seasons, like soybeans, in the event that severe weather delays planting.
According to Mr. Koory, organic food-grain production generally reflects organic feed-grain output, even though organic crops are grown in many states. However, organic corn and soybean acreage tends to be concentrated in the Upper Midwest and Great Lakes region, mostly to give feed to organic dairies. There is a significant amount of organic land in Michigan, Minnesota, Wisconsin, Iowa, New York, Texas, and California—the last three of which are also major dairy states. The planting of traditional crops is anticipated to be postponed as the Upper Midwest and Great Lakes region continue to experience winter conditions.